Oil prices continue to slip as an abundance of supply drives the price down and the price of WTI and Brent are comfortably below $50 per barrel, notes the research team at Wells Fargo.
“According to the International Energy Agency (IEA), oil supplies outside OPEC are expected to grow by almost 1.5 million barrels a day, with about half the expansion coming from U.S. crude production. Specifically, the U.S., Brazil, Canada and other non-OPEC producers are expected to increase output next year by the most in four years, an indication that OPEC may need to extend production cuts further to stabilize the price of oil.”
“U.S. oil production is up 6.4 percent since the beginning of the year and the three-monthmoving average has steadily increased. The number of active drilling rigs in the U.S. is up nearly 40 percent since the beginning of year, and the number continues to climb. If the price of crude continues to soften, we may see this trend reverse. The IEA also estimates that global oil demand growth will accelerate next year to 1.4 million barrels a day, or 1.5 percent, led by economic expansion in China and India.”
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